With the first quarterly MTD for Income Tax update deadline having passed, HMRC report that just over half of those who have signed up successfully submitted their first quarterly update.
And the Chartered Institute of Taxation (CIOT) is reminding taxpayers that HMRC’s 12‑month ‘soft landing’ period does not remove their obligation to comply with the new regime.
Although no penalties will be issued for late updates during the first year, taxpayers are still required to submit all four quarterly updates before they can complete their year-end MTD tax return.
Ellen Milner, CIOT’s Director of Public Policy said: “While it’s encouraging to see many sole traders and landlords successfully filed their first quarterly updates, it is important to remember that the first year of Making Tax Digital has been designed to help taxpayers get used to the new rules, but they will still need to comply with them.
“Some taxpayers may have put off filing their first quarterly update because late filing penalties have been waived, but they cannot turn a blind eye to them forever.
HMRC need to understand what the barriers have been that have prevented them from signing up before now
“These important updates will be needed before they can file their end-of-year tax return, and failing to keep proper digital records can still result in penalties of up to £3,000.
“Taxpayers should use this period to establish good digital record-keeping habits, become familiar with MTD-compatible software and get their quarterly submissions sent to HMRC ahead of their year-end tax return.”
Victoria Todd, Head of the Chartered Institute of Taxation’s Low Incomes Tax Reform Group (LITRG) described the numbers as “encouraging” but noted that it also means that around a third of the taxpayers who should have been in MTD from April 2026 have still to even sign-up.
“Automatically signing up taxpayers from September is an opportunity for HMRC to give these taxpayers some extra support,” she said. “But HMRC also need to understand what the barriers have been that have prevented them from signing up before now.
“Doing so, would enable HMRC to better understand what tools and support taxpayers need to comply with Making Tax Digital going forward.
“Hopefully, this will make the sign-up process more straightforward for the extra one million taxpayers – including 400,000 unrepresented taxpayers – who will be legally required to sign up by next April, when the threshold for taking part falls from £50,000 to £30,000.
“This will be especially important for those taxpayers who need to sign up but cannot afford professional tax advice.”
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